TORONTO (miningweekly.com) – The Mining Association of Canada (MAC) on Tuesday voiced support for Canadian Prime Minister Stephen Harper’s announcement that Canada and the Republic of Korea had concluded negotiations for a bilateral free trade agreement that would significantly boost trade and investment ties between the two countries.

The free trade agreement, Canada’s first with an Asian market, was expected to create thousands of new jobs in Canada and provide Canadian businesses and workers with a gateway to Asia, enhancing their global competitiveness. It would also level the playing field for Canadian companies competing with South Korea’s other trading partners, including the US and the European Union, which already have free trade agreements with Korea.

“Our government recognises the importance of opening new markets for Canadian goods, services and investment, which is why we launched the most ambitious trade agenda in Canadian history. The Canada-Korea free trade agreement will create jobs and open the door to the lucrative Asia-Pacific market for Canadian businesses.

“The Canada-Korea free trade agreement not only reflects the input of all sectors of the economy, provinces and territories, it will deliver significant benefits for Canadians from coast to coast to coast,” Harper said.

Canadian consumers would benefit from a greater variety of goods at lower prices, as the agreement would cover virtually all aspects of Canadian-Korean trade, including goods and services, investment, government procurement, environment and labour cooperation, and other areas of economic activity.

The agreement eliminates tariffs and reduces nontariff measures that hinder market access for Canadian exporters and investors in South Korea, bringing transparency and predictability to the business environment.  Once the agreement had been fully implemented, South Korea would remove duties on 98.2% of its tariff lines, covering virtually all of Canada’s imports.

South Korea is a key market for Canada – it is the world’s fifteenth-largest economy with a gross domestic product of $1.1-trillion, and the fourth-largest in Asia, with a population of 50-million people.

The country is already Canada’s seventh-largest merchandise trading partner and its third-largest in Asia, after China and Japan. Total merchandise trade between the two countries reached about $10.1-billion in 2012.

Tariff elimination would be particularly advantageous for Canadian businesses, as average South Korean tariffs are three times higher than Canada’s.

MINING ADVANTAGE

The MAC said that the agreement was of specific interest to the Canadian mining industry, owing to its reduction in tariffs, which were currently upwards of 8% for metals including iron, aluminium and nickel.

"Given the global nature of our sector, the Canadian mining industry is highly supportive of the formation of new trade agreements. The mining industry welcomes today's announced free trade agreement with South Korea given the region's importance as a sizeable market for many Canadian mineral and metal exports,” MAC president and CEO Pierre Gratton said.

In 2012, the total value of Canadian mineral exports to South Korea exceeded $1.8-billion. By value, coal is the most significant mining product exported, amounting to more than $1.1-billion in 2012, followed by aluminium, copper, nickel and zinc.

"We congratulate the government of Canada on reaching this important agreement. Today's announcement represents a significant milestone in Canada's continued efforts to enhance market access for our products across the Asia Pacific," said Canadian diversified miner Teck Resources president and CEO Don Lindsay.

Gratton added that access to strategic markets and the free flow of goods is critical for the Canadian mining industry's ability to compete on the world stage.

“We encourage the federal government to continue with its active trade agenda through negotiating and, where possible, finalising free trade agreements, double taxation agreements and foreign promotion and protection agreements with other emerging markets," he said.

EYE ON AFRICA

Canada had in December also inked two new foreign investment promotion and protection agreements with Tanzania and Guinea.

Africa also is a significant destination for mining, capturing 16% of global exploration investment in 2012, according to SNL Metals Economics Group. In the same year, the TSX and TSX-V exchanges accounted for $1.7-billion in equity capital raised for African mining projects in 28 countries on the continent.